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1

Buyer REJECTS goods (or seller fails to deliver)

2

Buyer ACCEPTS goods, but they are defective (breach of warranty)

B

In BOTH CASES, can get incidentals and consequentials (w/ conditions)

1

Incidentals include:  (Delchi)

a

Transportation, inspection, care of rejected goods

b

Expenses associated w/ cover

c

Other r’ble expenses caused by delays

2

Consequentials include:

a

ELTS:  (UCC § 2-715(2))

i

Cannot r’bly prevent dams by cover

ii

AND seller knew/reason about particular possible losses.  (UCC § 2-715)

b

Also: if P planned to resell items, and D knew it, damages may be P’s B/B.  (UCC § 2-715(2))

c

SO failure to cover prevents consequential dams, incl lost profits on other deals

i

In fact, failure to cover may preclude buyer from direct recovery for lost profits b/c may be failure of duty to mitigate

C

Damages for REJECTED goods

1

Two choices: collect damages, or cover and collect damages

a

Formula (collect dams) =  [FMV of goods at time buyer learned of breach] – [K price] + [amount already paid] – [expenses saved in conseq of breach]

b

Formula (COVER and collect) = [cost of subst goods] – [K price] + [amount already paid] – [expenses saved in conseq of breach].  (UCC § 2-712)

2

Cover must be made in good faith, w/o unr’ble delay.  Buyer must make r’ble search for subst goods

3

Market value of goods determined as of time and place buyer learned of seller’s breach

D

Damages for ACCEPTED goods (breach of warranty)

1

Formula = [value of goods as warranted] – [value of goods accepted]. (UCC § 2-714) (See Continental, p. 249)

a

Measured at time of acceptance

2

Alt formula = [cost of repair]. (Common law)

E

Damages for late perf

1

If goods were to be resold by buyer, and seller knew/reason of resale, buyer gets reduction in mkt value from time goods were due to time goods were delivered

V

Breach of SALE OF GOODS K— BUYER’S BREACH

A

Ways to measure damages

1

Market damages

2

Lost profits, if mkt damages insufficient (e.g., losing K)

B

Market damages

1

Formula = [K price] – [FMV at time and place for delivery] + [incidentals] – [expenses saved in conseq of breach].  (UCC § 2-708(1))

C

Lost profits

1

Formula = [profit from full perf] + [incidentals] – [credit for payment or resale].  (UCC § 2-708(2))

a

Credit for payment or resale only comes into play where seller isn’t a VOLUME SELLER.  That is, were buyer’s breach didn’t cost seller a sale — he sold his ltd quantity of goods anyway

b

Where seller is a volume seller, the buyer’s breach did cost seller a sale, so you don’t give credit for payment or resale.  (Neri)

c

Eisenberg calls the volume-seller situation the FISHING MODEL.  This means that one fish’s escape does not enable the fisherman to catch another fish -- he does lose a fish (profit) due to the fish’s escape

D

Seller’s options in event of buyer’s breach: w/hold delivery; resell and recover damages; recover damages for non-acceptance; cancel.  (UCC § 2-703)

E

Deposits:

1

Buyer who breaches gets certain amount back from his deposit.  (§ 2-718(b))

22

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